S&P 500 Caps First Weekly Drop Since Sept.

By Rita Nazareth -
Nov 4, 2011

U.S. stocks fell, driving the
Standard & Poor’s 500 Index to its first weekly decline since
September, as a disagreement on Europe’s resources to fight the
debt crisis offset a drop in the American unemployment rate.

The S&P 500 dropped 0.6 percent to 1,253.23 as of 4 p.m.
New York time, after falling as much as 1.8 percent earlier. The
gauge was down 2.5 percent this week. The Dow Jones Industrial
Average slid 61.23 points, or 0.5 percent, to 11,983.24.

“Today’s jobs report does little to alleviate concern,”
Mohamed A. El-Erian, the chief executive officer at Pacific
Investment Management Co. in Newport Beach, California, said in
an e-mail. His firm runs the biggest bond fund. “Initial
indications suggest that G-20 leaders are having difficulties
agreeing on the relatively easy items on their agenda. This
bodes badly for the more difficult issues that also need
coordinated measures on the part of the G-20.”

Benchmark gauges tumbled earlier this week as Greek Prime
Minister George Papandreou announced on Oct. 31 a parliamentary
confidence vote and his desire to hold a referendum on a
European Union aid package needed to avert default. Equities
rebounded yesterday as Greece abandoned the referendum, moving
closer to accepting the bailout.

Fail to Agree

Global stocks slumped today as the Group of 20 nations
failed to agree on increasing the International Monetary Fund’s
resources to fight Europe’s debt crisis. Ruling party lawmakers
urged Papandreou to step aside and allow the formation of a new
government that can approve the bailout plan for Greece.
Papandreou may propose Finance Minister Evangelos Venizelos as
his replacement, Mega TV reported.

The unemployment rate unexpectedly fell to a six-month low
of 9 percent from 9.1 percent, even as the labor force expanded.
The 80,000 increase in payrolls followed gains in the prior two
months that were revised up by 102,000. The Citigroup Economic
Surprise Index for the U.S., which measures the rate at which
data is beating or trailing economists’ forecasts, is at 18.7,
the highest since April. It rose from minus 117.2 on June 3.

Stocks Trim Losses

Stocks pared losses amid speculation European leaders will
make further progress on taming the debt crisis over the
weekend, according to Russ Koesterich at BlackRock Inc. (BLK)

“If you can get any clarity on Europe, you can move
higher,” Koesterich, the San Francisco-based global chief
investment strategist for the IShares unit of BlackRock, said in
a telephone interview. His firm oversees $3.3 trillion as the
world’s largest asset manager. “Plus, the jobs report wasn’t
bad. The labor market isn’t growing fast enough, but it doesn’t
appear to be falling backwards either.”

Financial stocks had the biggest decline in the S&P 500
among 10 industries, falling 1.4 percent as a group. The KBW
Bank Index dropped 1.5 percent as 21 of its 24 companies slid.

Bank of America lost 6.1 percent to $6.49. The bank said it
may exchange preferred securities for a total of $6 billion of
common shares and debt, a plan that could cut interest and
dividend costs and improve capital levels. The firm may issue
400 million shares and $3 billion of senior notes, taking
advantage of lower prices for the bank’s existing securities.

‘Dilutive’

“It looks like this will be dilutive to shareholders, but
that’s the minor issue,” Richard Bove, an analyst with Rochdale
Securities LLC in Lutz, Florida, said in a telephone interview.
“The major issue is they said they wouldn’t issue stock, and
this may be one too many statements to investors that didn’t
turn out true.”

AIG slumped 2.9 percent to $23.91. The quarterly loss casts
doubt on the insurer’s ability to benefit from more than $25
billion in assets that can be used to lower future tax bills.
The fourth quarter will be “very important” in determining
whether AIG can lower a so-called valuation allowance that has
restricted the company’s use of the tax assets, the insurer said
late yesterday.

MF Global Holdings Ltd. (MF) tumbled 7.9 percent to 26 cents.
Jon Corzine, who joined the company 20 months ago to transform
the futures broker into an investment bank, quit as chairman and
chief executive officer amid regulatory probes and after the
firm filed the eighth-largest bankruptcy in U.S. history.

Halted Twice

Jefferies gained 0.5 percent to $12.07. Trading in
Jefferies’s stock was halted twice yesterday and the shares
plunged as much as 20 percent, the most ever, after Egan-Jones
Ratings Co. downgraded the investment bank’s debt, citing large
“sovereign obligations” relative to equity.

Groupon, trading under the symbol GRPN, soared 31 percent
to $26.11. It surged as much as 56 percent earlier. The biggest
online-coupon provider sold 35 million shares at $20 each, the
largest initial public offering by a U.S. Internet company since
Google Inc. raised $1.9 billion in its 2004 initial offering.

Genworth Financial Inc. (GNW) surged 17 percent, the most in the
S&P 500, to $7.19. The company said it will sell a stake in its
Australian mortgage-guaranty business next year and may buy back
stock. As much as 40 percent of the Australian unit may be sold
in an IPO set for the second quarter of 2012, the Richmond,
Virginia-based company said late yesterday.

JPMorgan Chase & Co. (JPM) raised its 2011 earnings-per-share
estimate for the S&P 500 to $97.75 from $97, citing
“impressive” third-quarter profits. Per-share earnings beat
estimates at about three-quarters of the companies in the S&P
500 that released results since Oct. 11, according to data
compiled by Bloomberg.

McGraw-Hill Cos., CME Group and News Corp.’s Dow Jones
agreed to join their index businesses, bringing the S&P 500 and
Dow average under common ownership.